I.T.A. NO.633/LB OF 1992-93 VS I.T.A. NO.633/LB OF 1992-93
1997 P T D (Trib.) 2000
[Income-tax Appellate Tribunal Pakistan]
Before Shariq Mahmood, Accountant Member
I. T. A. No.633/LB of 1992-93, decided on 07/01/1997.
Income Tax Ordinance (XXXI of 1979)-----
----Ss.22, 65 & 61---Income from business---Re-opening of assessment-- Non-compliance of notice under S.61 of the Ordinance ---Effect---Assessee was originally assessed under S.59(1) of the Income Tax Ordinance, 1979-- Later on Assessing Officer observing that closing stocks were not shown as opening stocks, re-opened the assessment under S.65, Income Tax Ordinance, 1979---First Appellate Authority upheld action taken by Assessing Officer ---Assessee, aggrieved by such treatment went into further appeal---Held, it was admitted that closing stock was not reflected in trading accounts---Such an "admitted error" was sought to be condoned ---Assessee did not produce books of account when requisitioned under S.61 of the Ordinance---Action of Authorities below invoking provisions of S.65 was justified in circumstances.
M. Aslam Chaudhry, A.R. for Appellant.
Fiza Muzaffar, D.R. for Respondent.
Date of hearing: 7th January, 1997.
ORDER
The appellant/assessee, a registered firm, deriving income from running of a brick-kiln, is in appeal against the decision of the first Appellate Authority CIT (A) Zone-II, Multan vide order dated 12-5-1992 wherein the action of the Assessing Officer regarding reopening of the case under section 65 of the Income Tax Ordinance, 1979 was confirmed alongwith the number of rounds at 5.
2. Assessment in this, case was originally finalised under section 59(1) accepting the declared income. Later in the Assessing Officer observed that closing stock of Rs.41,240 as on 30-6-1984 was not shown as opening stock ,as on 1-7-1985 and issued show-cause notice to the assessee., The reply furnished by the assessee was not found satisfactory by the Assessing Officer the case was accordingly reopened under section 65 after observing of statutory formalities.
3. The I.T.O. found the assessee's explanation, regarding the non declaration/reflection of closing stock of Rs.41,240 untenable finalised assessment after taking the production capacity of the brick Kiln 400,000 and subjected it to 5 rounds. The income determined under section 62/65 stood at Rs.142,750.
4. Appeal was preferred against the above decision where the CIT (A) upheld the action under section 65 and the determination of rounds at 5. The applied sale rate in case of brick Kiln was set aside. The assessee is now in appeal before me and objects to the upholding of action under section 65 and confirmation of rounds at 5.
5. The learned A.R. arguing on behalf of the assessee mostly repeated arguments as made before the First Appellate Authority. It was repeated that there was no element of concealment as there was to discrepancy in the account version. An effort was made to justify this stand by explaining that the closing stock of Rs.41,240 had been shown in the balance sheet but "through an error" not shown in the trading account. On the basis of this explanation it was pleaded that the action under section 65 was not justified. Objection was also taken to the adoption of rounds at 5 maintaining that in support there was no material or evidence.
6. The learned D.R. does not find itself in agreement with the point of view of the appellant and supports the impugned order for reasons and factors discussed therein.
7. I have considered the explanations and submissions made by the appellant and I am hardly convinced. In the first place it is admitted and acknowledged that the closing stock was not reflected in the trading account, an admitted "error" is sought to be condoned and similar by the action under section 65. The assessee did not produce its books of accounts when requisitioned under section 61. The plea that the accounts had been maintained in the same pattern as in the earlier years was also found to be contrary to the facts of the case. The action of the authorities below in invoking the provisions of section 65 is justified and, therefore, upheld.
8. The I.T.O. after noting the expenditure incurred on fuel worked out the sales after adopting the number of rounds at 5. This treatment was upheld by the CIT (A). I find that this action is harsh as in support no parallel case been brought on record. Books of accounts have not been produced and account version stands rejected. Normally number of rounds are adopted at 4 in case of brick kilns. I would direct accordingly requiring the Assessing Authority to work out the turnover on the basis of four rounds.
9. The learned A.R. during the course of proceedings, also submitted that the CIT (A) had not given a specific finding on the question of prosecution and issuance of notice under section 116. In the arguments advanced by the A.R. I find no cause for grievance at the stage. Notice under section 116 is a show-cause notice wherein the assessee is called on to explain its point of view. This it should do accordingly
10. The appeal is disposed of in the manner and to the extent indicated above.
C.M.S./369/Trib. Appeal disposed of.